Consumer advocates for more rules on zero percent financing

BERLIN Some consumer credit rules do not yet apply to zero percent financing. According to the will of the EU Commission, consumers should be better protected when borrowing in future. However, the EU countries want to exclude some forms of credit from the planned reform. “It’s a problem that zero percent financing has lower due diligence requirements than other consumer loans without reason,” Mohn said. “Without a careful credit check and sufficient information, this can be the beginning of financial over-indebtedness.” According to Mohn, a survey by the consumer advice centers showed that in the case of zero percent financing, there is usually insufficient testing to determine whether consumers can afford the loan. In addition, not all zero percent financing keeps what it promises. “Expensive residual debt insurance is often sold, although it is often not clear whether this is mandatory or voluntary.” If residual debt insurance is to be regarded as mandatory, the costs would have to be included in the effective interest rate. “In some cases, the loan then costs considerably more, for example 11 instead of 0 percent. Other loans are only interest-free for a limited period of time,” reported Mohn. It is therefore important that consumers are informed in detail about the conditions before the contract is concluded.